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MD
57,7
1638
Received 17 May 2018
Revised 9 August 2018
13 September 2018
Accepted 29 September 2018
Management Decision
Vol. 57 No. 7, 2019
pp. 1638-1658
© Emerald Publishing Limited
0025-1747
DOI 10.1108/MD-05-2018-0557
Does organizational culture matter
in the relationship between trust
and SMEs performance
Abdullahi Hassan Gorondutse
School of Business Management, Universiti Utara Malaysia, Sintok, Malaysia and
Department of Management Sciences, Nigerian Police Academy Nigeria Wudil,
Kano, Nigeria, and
Haim Hilman
School of Business Management, Universiti Utara Malaysia, Sintok, Malaysia
Abstract
Purpose – Although literature indicated that business social responsibility (BSR) is now a common practice
and accepted norm among business enterprises globally, the concept is not well understood and its influence
on business performance is contradictory. Therefore, based on the stakeholder theory, the purpose of this
paper is to examine the association among trust of BSR and the performance of small-scale industries in
Nigeria with organizational culture as a moderating factor.
Design/methodology/approach – The hypotheses of the study were tested using personally administered
survey questionnaires; the study obtained 486 valid questionnaires, which were evaluated using SmartPLS
Algorithm and bootstrapping functions.
Findings – The research findings were established using SmartPLS Algorithm and bootstrapping
functions. According to the results, the research constructs have a satisfactory convergent and
discriminant validity. Equally, the overall model has a very high predictive relevance. In addition, the
results showed that all the predicting variables explained 40 percent variance in the criterion variable.
Thus, the study established strong positive influence of trust of BSR on the small-scale industrial
performance. Correspondingly, the study established a strong positive impact of organizational culture on
the performance of the small-scale industries. However, the study could not establish the moderating
influence of organizational culture on the constructs.
Research limitations/implications – The study used perceptions of owner/managers and only
small-scale industries.
Practical implications – The research findings may be found beneficial to policy makers and academics,
particularly in understanding trust of social responsibility, its influence on performance of small-scale
industries and fit between organizational culture and strategic direction of a business enterprise.
Originality/value – The study offers some meaningful contribution to knowledge on BSR by exploring the
mechanisms connecting trust of BSR with performance. Also, research expert in the field of BSR usually
explores the advantage of these findings by utilizing the action of BSR on internal and external stakeholders.
Keywords Performance, Organizational culture, PLS, Trust of BSR
Paper type Research paper
1. Introduction
For quite a few decades, business social responsibility (BSR) has become a common practice
and accepted norm in the world of business. According to literature, the rise of BSR, as a
concept, has restructured the way business activities are carried out and redefined the profit
maximization notion of business enterprises (David, 2012; Karem et al., 2011; Bedenik and
Davor, 2010; Fiori et al., 2007). Similarly, Gorondutse and Hilman (2013a), David (2012),
Bedenik and Davor (2010), and Carroll and Shabana (2010) asserted that BSR has gotten
wider acceptance due to the global economic crisis, extinction of well-known biological
species and need for environmental adjustment which, altogether, succeeded in realigning
the profit-making motives of business firms with social responsibilities. Consequently,
Gorondutse and Hilman (2015), David (2012), Bedenik and Davor (2010) and Fiori et al. (2007)
have described BSR as a broader concept that seeks to balance environmental, social and
economic responsibility of corporate entities with neoliberal reductionism profit motives Organizational
from a general perspective, of which non-conformity affects the operations of the company culture
and also attracts environmental penalties (Gorondutse and Hilman, 2015). Despite
considerate numbers of research on CSR and performance relation, to date knowledge gap
linking CSR with its consequences still exists and needs to bridge up (Barakat et al., 2016;
Aguinis and Glavas, 2012). Despite these critical connections, there has been a shortage of
studies assessing the relationship between some components of CSR and performance, 1639
Now, can trust of BSR have any influence on business performance?
According to Hilman and Gorondutse (2013), Hansen et al. (2011) and Buchan et al. (2002),
trust is used as a powerful tool in managing businesses, trade and interaction with
stakeholders. Based on this, Hilman and Gorondutse (2013) and Perrini, Castaldo, Misani
and Tencati (2010) emphasized that trust is a two-way affair between principal and trustee,
where both parties have mutual obligations to exercise and accomplish within agreeable
terms. Likewise, in answering the research question, the “stakeholder theory” was used in
the study, being most popular and can explain the importance of BSR on business
performance in better ways. Accordingly, Carroll and Shabana (2010) asserted that business
survival and organizational success are dependent upon conformity with the social
responsibility, societal opportunities and business procedures. Thus, the study developed a
theoretical model that explains BSR and the performance relationship in a broader way
(Gorondutse and Hilman, 2015).
Moreover, the development of the research model concurred with recommendations by
Peloza and Papania (2008) and Jones (1995) that called for adoption of the stakeholder theory
to integrate managerial and strategic motives with BSR. Therefore, the concept of giving
priority to stakeholders provided a podium for investigating the influence of trust of BSR on
performance of small-scale businesses. Equally, as Gorondutse and Hilman (2015) found,
BSR connotes the support of business enterprise to communities in which it operates. So, the
study emphasized that profit-making organizations must practice BSR in the operating
environment, as they pursue the goal of profit maximization. Hence, literature indicated that
the linkage between BSR and performance is not properly understood, as findings of prior
studies were inconclusive. Thus, as suggested by Zaborek (2014), Fang. And Herndon et al.
(2001), the present study investigates the moderating influence of organizational culture on
the two constructs.
Although the impact of social responsibility among multinational corporations has been
investigated in Nigeria (Abiodun, 2012; Okoro, 2012; Adegbite and Chizu, 2011; Opara, 2010;
Okoye, 2009; Hassan, 2007; Ojo, 2007; Amaeshi et al., 2006), prior studies have neglected to
test the influence of BSR on the performance of indigenous local firms despite their
contributions to economic development in terms of employment, export and gross domestic
product (Gorondutse and Hilman, 2015; SMEDAN, 2012; Tyboust, 2000). This implies that
BSR is still a new concept among Nigerian small-scale industries, because most of the
existing studies on BSR depend on the established system situated within the western
context. However, a survey of this kind may assist a lot in enhancing the strategic position
of the firm especially in developing economies like Nigeria, where most of the formal
business organizations are less established and less active. Though BSR creativities are
growing beyond the western countries’ (e.g. the USA) imagination, the legal framework for
the adoption of BSR should be cherished with high esteem in developing economies like
Nigeria (Pan et al., 2018). Although there is lack of proper attention in the dissemination
of trust BSR perceptions in the body of literature (Buvik and Tvedt, 2016; Zaborek, 2014),
experimental studies should incorporate organizational culture and strength while studying
trust and performance relation.
Thus, the present study investigates the influence of trust of BSR on the performance of
small-scale industries in Nigeria, with organizational culture as the moderator. Since Nigeria
MD is distinctively unique from countries such as the USA and those in Europe, the study may
57,7 help small-scale businesses in realizing the importance of BSR and its applications in the
business setting (Gorondutse and Hilman, 2015; Gorondutse and Hilman, 2013b; Hsu, 2012;
Rettab et al., 2009). This paper is important because the projection of BSR behaviors differs
significantly in most of the developing economies compared to the developed countries (Pan
et al., 2018). Thus, the study is designed as follows: the literature review on BSR and the
1640 relationship between trust of BSR, organizational culture and performance; theoretical
underpinning; research methodology; hypotheses testing; analysis and findings; and
conclusion, recommendations and limitation of the study.

2. Literature review
Review of literature across the globe indicated that the idea of social responsibility
had been a subject of consolidated ideological debates, reflection, analysis and theory
building (Allouche and Laroche, 2006; Freeman, 1984; Carroll, 1979; Gorondutse, 2014).
Also, scholars shared common views and reached a consensus that ethical issues and
social responsibility often have similar contextual meanings (Gorondutse and Hilman,
2013a; Perrini, 2006). Therefore, the two terms “CSR” and “BSR” are identical and used
interchangeably (Beneke et al., 2012; Lee, 2008). Despite the availability of CSR/BSR
knowledge in the existing literature, there is no generally available or precise conceptual
definition for the two concepts (Matten and Moon, 2008; Torugsa et al., 2012). It may be
due to the overlapping issues that usually occur with the CSR/BSR concepts which seems
to be identical to other interpretations in different business communities (Matten and
Moon, 2008; Torugsa et al., 2012).

2.1 Business social responsibility (BSR)

In recent times, the concept of BSR has received global attention and is being used
interchangeably with other terms such as corporate responsibility, stakeholder management,
business ethics, corporate sustainable development and corporate sustainability (Lee, 2008;
Matten and Moon, 2008). Accordingly, Hilman and Gorondutse (2013) and David (2012)
maintained that BSR seeks to incorporate ecological, social and economical imperatives in the
daily operations of business enterprises. Similarly, Hilman and Gorondutse (2013) and Carroll
and Shabana (2010) asserted that, unlike in the past, BSR has now become an ethical
obligation in the globalized business world by reducing undesirable control and inspiring
businesses to operate within the dictations of the social environment.
Even though literature indicated that researchers have investigated the influence of
corporate social responsibility on firm performance (Aupperle et al., 1985; Cochran and
Wood, 1984) as well as the impact of BSR on performance (McGuire et al., 1988; Gorondutse
and Hilman (2015), the effect of BSR on performance is inconclusive. For example,
Gorondutse (2014) has established an insignificant relationship between BSR and stock
market performance. On the contrary, Moskowitz (1972) reported that socially responsible
business practices exert positive influence on corporate equity returns. Again, similar
positive results have been established between social responsibility indicators of companies
such as return on assets and capital employed and selected performance indicators
(Tsoutsoura, 2007; Balabanis et al., 1998). Also, McGuire et al. (1988) recommended for
further research between BSR and performance that can adopt different firm performance
measures to minimize common method bias Gorondutse and Hilman (2015).

2.2 Relationship between trust of BSR and performance

In the modern business world, scholars have defined trust as a social bond that joins
together all diverse structures of business organizations (Hilman and Gorondutse, 2013;
Tian et al., 2011; Puusa and Tolvanen, 2006; Atkinson and Butcher, 2003). Pivato et al. (2008) Organizational
have described trust as a critical component in the formation of strategic partnerships and culture
the speeding up of performance of corporate enterprises. Also, Pivato et al. (2008)
and Puusa and Tolvanen (2006) have interpreted trust commonly as a relational affair and
critical factor in making individuals feel emotionally safe, promoting interaction among
groups and helping companies to achieve business goals. Correspondingly, prior studies
have established that the level of BSR trust of companies has a significant relationship with 1641
business performance (Gorondutse and Hilman, 2015; Hilman and Gorondutse, 2013; Perrini
et al., 2010; Ellen et al., 2006; Osterhus, 1997) and customer perceptions (Hilman and
Gorondutse, 2013; Tian et al., 2011; Osterhus, 1997). Likewise, previous studies have
described trust as a strong determinant of buyer–supplier relationships (Zaheer et al., 1998)
as well as business equity and success of joint venture. Furthermore, the indirect influence
of trust on performance has also been established (Ali and Khalid, 2017; Mohr and Puck,
2013). Again, a previous study has found that higher business performance can only be
impacted indirectly by trust through a reduction in transaction costs (Gorondutse and
Hilman, 2015; Zaheer et al., 1998).
Additionally, there is a common belief in company practices which proposed that BSR
did not solely depend on principles, but instead, it equally includes progressive egotism
(Hilman and Gorondutse, 2013; Perrini et al., 2010; Smith, 2003). The stakeholder theory
believes that a firm’s social accountable actions will enhance business and shape it to be
more attractive in terms economic performances, market reflection and customer retention
compared to its competitors (Perrini et al., 2010). Trust, therefore, played an immediate
role in improving organization social performance (Mohr and Puck, 2013; Pivato et al.,
2008; Tian et al., 2011). On the contrary, the absence of trust in any organization may
discourage business expansion, or even lead to liquidation or complete withdrawal
of the business (Mohr and Puck, 2013). Previous researchers used trust of BSR with
regard to consumer’s commitment toward product and services provided by firms
(Hansen et al., 2011; Tian et al., 2011).
Although the literature has established the impact of trust of BSR on the performance
of companies, however, a negative relationship has also been reported between the
constructs (Mohr and Puck, 2013; Perrini et al., 2010; Ellen et al., 2006; Osterhus, 1997).
Also, trust has been found to be an essential catalyst for team productivity (Buvik and
Tvedt, 2016; Curseu and Schruijer, 2010). Research on how trust affects team performance
is still limited and inconclusive (Ali and Khalid, 2017; Buvik and Tvedt, 2016; Dirks and
Ferrin, 2001) because some researchers argue that performance is context specific and
may differ in line with nature of industry and teams involved. Similarly, most results
concerning the association between trust and group performance may be due to the small
focus on how trust affects organizational performance (Ali and Khalid, 2017; Buvik and
Tvedt, 2016). At the same time, some researchers were inclined toward the traditional
thought on how trust studies focused on the individual rather than the organization
level. Notwithstanding, since literature established the influence of trust of BSR on
performance, therefore the study investigates the impact of trust of BSR on business
performance from an organizational perspective using measures of trust of BSR adapted
from Tian et al. (2011), Ellen et al. (2006), and Osterhus (1997). Based on this, the study
postulated that:
H1. Trust of BSR is significantly related to performance.

2.3 Relationship between organizational culture and performance

According to Goffee and Jones (1998), Daft (2005) and Adebayo (2011), organizational
culture denotes to the sharing of values and beliefs as well as acceptable behavioral norms
MD by employees in solving organizational problems. Organizational culture has also been
57,7 termed as a collection of behaviors, attitudes, values, assumptions and beliefs of its
members (Gorondutse and Hilman, 2015). Based on this, Ahmad et al. (2011) and Wallach
(1983) divided organizational culture into: supportive, innovative and bureaucratic, as it is
unseen, intrinsic and can involve informal perception, as well as innate feelings that
motivate the actions, attitude or behavior of employees. Also, Daft (2005) and Cameron and
1642 Freeman (1991) contended that organizational culture is an invaluable resource for problem
solving, competitive edge, implementation of new business strategies and realization of
organizational objective (Gorondutse and Hilman, 2015).
In a different scenario, Sadri and Lees (2001) and Larry et al. (2011) argued that a positive
and high level of organizational culture can make an average employee become a
high-performance employee, whereas a negative and weak culture may make an outstanding
individual perform less efficiently and, thus, leads to ineffectiveness (Gorondutse and Hilman,
2016. Thus, organizational culture has an active role and direct effect on the organizational
performance of an organization (Al-bahussin and El-garaihy, 2013). Gorondutse and Hilman
(2016) also discovered that organization with a supportive culture recorded superior
performance above other cultural types.
In addition, organizational culture has been described as a key determinant of firms’
competitive performance and strategic directions (Gorondutse and Hilman, 2016) as well as
a factor that makes business organizations unique. Likewise, researchers have established
an association between organizational culture and performance (Melo, 2012; Adebayo, 2011).
Again, a significant effect of organizational culture on performance has been reported by
Galbreath (2010) who established further that having a strong culture in an organization can
reshape overall business performance and contribute to higher business performance.
Furthermore, Al-bahussin and El-garaihy (2013) contended that leading businesses are
utilizing their invaluable culture in the evaluation of intangible assets (workers) and
acceleration of company performance.
Further, organizational culture theory recommends that the collective behavior of
humans who are part of an organization makes the meanings that people attach to their
actions; organizational culture that inspires calculated risk taking and independence
serves as an antecedent of positive and innovative strategy implementation and outputs
(Anning-Dorson, 2017). Although scholars such as Pivato, Misani and Tencati (2008),
Beneke et al. (2012), Fang et al. (2010) and Peloza and Papania (2008) have reported a
connection between organizational culture and business performance, a business with the
right culture that inspires keen contribution of all in innovative actions and innovation
implementation will moderate the effect of trust of BSR in the eras of market uncertainty
on firm performance. What makes the present study unique from the previous ones is that
organizational culture is perceived both as a predicting as well as moderating variable
and, equally, its influence is tested on performance and relationship between trust of BSR
and performance. Therefore, the study postulated that:
H2. There is relationship between organizational culture and performance of small-scale
industry.
H3. Organizational culture will moderate the relationship between trust of BSR
and performance.

2.4 Underpinning theory

According to literature, stakeholder theory has many interpretations. However, one thing
that is clear in all interpretations of the theory is that it provides detailed explanations
on business plans or agreements, guides business activities and directs operations of
reputable companies (Donaldson and Preston, 1995). This implies that companies must act Organizational
conscientiously to meet the demands of stakeholders, achieve corporate objectives and culture
maintain an excellent community. Similarly, Jones (1995) asserted that establishment of
trust is advantageous to business, as most often it solidifies the foundation for
cooperating with stakeholders and supports business activities of enterprises based on
ethics and trustworthiness.
Apart from that Jones (1995) maintained that most of business associated with numerous 1643
stakeholders in line with basis of trust and support are an inspiration to behavior and
behave ethically, because such action can lead to have competitive benefit. Similarly, it
expected that stakeholder happiness leads to superior dedication and better performance
(Freeman, 1984). The stakeholder theory clearly explains the association of different society
or actors around respective businesses. The substantial effect of Freeman’s stakeholder
model among fractioned might be confidence based which is on the cognitive power of
visual representations (Fassin, 2009). Freeman’s (1984) idea can be affected by the business
actions and see the firms as the center of a sequence of mutually dependent and
interrelations (Fassin, 2009).
Therefore, the study is underpinned by the stakeholder theory. Hence, it promotes
keeping stakeholder promises (Pivato et al., 2008) and cooperating with stakeholders
cultures based on trust, to yield fruitful benefits to business organization ( Jones, 1995).
In summary, the model developed in this study considers that three structural
mechanisms, namely, performance dependent, trust of BSR independent and
organizational culture, moderate the positive influence of trust of BSR on performance
(see Figure 1).

3. Methodology
For this study, a cross-sectional non-experimental design was adopted. The sample size
was 394 and was determined from a population of 29,204 SMEs using Yamane’s (1967)
sample selection criteria. Thus, owners/managers of SMEs in Kano State, Nigeria, were
the unit of analysis. To tackle the issue of non-response bias and take care of sampling
error, the sample size was increased to 800 which is also far greater than the10 samples
per variable standard prescribed by Hair et al. (2008). So, as contended by Cavana et al.
(2001) and Churchill and Peter (1984) that a scale with a midpoint is more reliable and can
offer best research outcomes, all items that measured the research variables, namely, trust,
organizational culture and performance were adapted from Tian et al. (2011), Stanaland
et al. (2011), Kaplan and Norton (1992), Venkatraman and Ramanujam (1986) and Wallach
(1983) and measured on a seven-point Likert scale (Gorondutse and Hilman, 2015).
Accordingly, the study administered 800 survey questionnaires to respondents who were
drawn from the population using purposive sampling technique. However, overall, only
486 questionnaires were useable and suitable for data analysis, accounting for 64 percent
valid response rate which Tabachnick and Fidell (2007) described as sufficient for
statistical analysis and generalizability.

H1
TRUST OF BUSINESS
H2 H3
BSR PERFORMANCE

Organizational
Figure 1.
culture Research framework
MD As recommended by scholars in different disciplines such as e-business (Pavlou and Chai,
57,7 2002), consumer behavior (Fornell and Robinson, 1983), marketing, management information
systems, strategic management (Hulland, 1999) and organizational behavior (Higgins et al.,
1992), all the collected responses were evaluated using SPSS version 18 and SmartPLS version
2.0. Hence, SPSS, being a first-generation tool of analysis, was used for descriptive statistics
while PLS, being a second-generation tool of analysis, was used in conducting a two-stage
1644 analysis technique recommended by Chin (1998), where the measurement model is first
evaluated before going further for direct hypotheses testing. The same approach has also been
established by Henseler et al. (2012) due to its growing popularity among international
researchers (Gorondutse and Hilman, 2015).

3.1 Common method bias

In every cross-sectional survey research, a Harman single-factor test needs to be conducted
in order to establish clean data that are free from common method bias/variance.
As expected, the outcomes showed that the data are free from any form of bias, as no
significant bias was seen. Likewise, from the results of correlation analysis contained in
Table V, no tremendously high, extreme or significant correlation above (r: 0.90) was found
among the research variables. Consequently, as asserted by Bagozzi, Yi and Phillips (1991),
common method bias is not an issue in this study, as corroborated further by the results and
tenability of the research instruments (Gorondutse and Hilman, 2015, 2017).

4. Research findings
4.1 Demographic profile of respondents
The descriptive analysis revealed that 29.4 percent were chief executives/owners,
29.8 percent were third-class managers and 31.1 percent were general managers. Equally,
the descriptive statistic shows that 35 percent of small-scale businesses were in existence for
the past 5 years while 32.5, 22.6, 7.4 and 2.5 percent of small-scale businesses were in
existence for the period of 5–10 years, 11–20 years, 21–40 years, and 40 years and above.
Still, the descriptive statistic shows that 25.5, 20, 13.6, 10.7, 10.5, 7, 4.5 and 8.2 percent of the
small-scale businesses operate in food and beverages, poultry, textile materials, weaving
and dying, furniture and equipment, recycling, tobacco product, and others. In addition, the
capital base of the small-scale businesses ranges from 1 to 100m naira, 101 to 200m naira,
201 to 300m naira and above 301m naira which, accordingly, accounted for 43.8, 10.7,
5.8 and 5.1 percent of the 486 total surveyed businesses. Thus, this confirms the smallness
characteristics of the business enterprises (Table I).

4.2 Descriptive analysis

Table II provides an overview of the mean and standard deviation of the research variables.
According to the descriptive statistics, trust of BSR and organizational culture have higher
means (5.60 and 5.33) than business performance (5.23). Nonetheless, business performance
has the highest standard deviation (0.69) over trust of BSR and organizational culture
(0.61 and 0.58). Thus, the outcome establishes the degree of perception on trust of BSR,
organizational culture and performance of small-scale industries in Kano State, Nigeria
(Gorondutse and Hilman, 2015).

4.3 Measurement model

In this study, the measurement model was assessed based on the convergent validity and
discriminant validity criteria of established by Anderson and Gerbing (1988), Hair et al.
(2013) and Ringle et al. According to the scholars, the recommended threshold value for
item indicator loading is 0.5, composite reliability and Cronbach’s α coefficient is 0.7 and
S. No. Items Frequency Percentage
Organizational
culture
1 Job title
Chief executive/owner 151 29.4
General manager 160 31.1
Managers 153 29.8
Other 50 9.7
2 Years of existence 1645
Less than 5 180 35
5–10 167 32.5
11–20 116 22.6
21–40 38 7.4
Above 40 13 2.5
3 Organization location
Headquarters 329 64
Division 92 17.9
Subsidiary 43 8.4
Others 50 9.7
4 Ownership of the organization
Individual 247 48.1
Partnership 168 32.7
Joint ventures 62 12.1
Others 37 7.2
5 Number of employee in your organization
Less than 20 271 52.7
21–40 91 17.7
41–60 39 7.6
61–80 66 12.8
Above 80 47 9.2
6 Organization activities
Food and beverages 131 25.5
Tobacco product 23 4.5
Textiles materials 70 13.6
Weaving and dyeing 55 10.7
Furniture and equipment 54 10.5
Recycling 36 7
Poultry 103 20
Others 42 8.2
7 Total assets at the end of year (million naira)
Less than 1 178 34.6
1–100 225 43.8
101–200 55 10.7 Table I.
201–300 30 5.8 Summary of
301 and above 26 5.1 respondents’ profile

Constructs n Mean SD Minimum Maximum

Trust 486 5.60 0.61 2 7 Table II.

Organizational culture 486 5.33 0.58 2 7 Descriptive
Performance 486 5.23 0.69 1 7 analysis results

the average variance extracted (AVE) is 0.5 above (Fornell and Larcker, 1981; Hair et al.,
2013; Gorondutse and Hilman, 2017). Therefore, as recommended by Hair et al., all items
that measure the constructs with loadings lower than 0.5 were deleted. As such, one item
that measures the independent construct (trust) was deleted due to lower loadings while
MD two items were retained. Correspondingly, four items that measure the dependent
57,7 variables were deleted due to lower loadings while three items were retained. Hence, as in
Table III, all the item indicators achieve the recommended loadings above 0.5 (Hair et al.,
2018) (Figure 2).
Similarly, as in Table III, the independent variable, moderator and dependent constructs
have Cronbach’s α of 0.970, 0.865 and 0.749, respectively. Additionally, both the exogenous
1646 and endogenous constructs as well as moderating construct have acceptable composite
reliability of 0.979, 0.890 and 0.848, respectively. Furthermore, all the research constructs
have AVE values of 0.713, 0.425 and 0.661, respectively, for independent, moderator and
dependent variables. Thus, as illustrated in Table III, the convergent validity of the research
constructs has been achieved (Hair et al., 2018; Nunnally, 1978).
In addition, as shown in Tables IV and V, the study assessed discriminant validity of the
research constructs using correlation matrix and cross-loadings criteria. According to the
results, the square roots of AVE for each construct are greater in rows and columns,
signifying adequacy of discriminate validity of variables (Hair et al., 2018).
Equally, as can be seen in Table V, the cross-loading results indicated that loadings for
items that measure the individual constructs are greater than the item loadings of
corresponding constructs in rows and columns, thus signifying adequacy of discriminate
validity of variables (Hair et al., 2018).

Variable Indicator Loading Cronbach’s α Composite reliability (CR) AVE

Trust TR02 0.981 0.970 0.979 0.713

TR03 0.709
Performance OP05 0.549 0.749 0.848 0.661
OP06 0.924
OP07 0.910
Organizational culture BU08 0.500 0.865 0.890 0.425
IN10 0.668
IN11 0.677
IN13 0.635
IN14 0.652
IN16 0.633
SP17 0.665
SP20 0.673
Table III. SP22 0.714
Convergent validity of SP23 0.676
research constructs SP24 0.656

BU08 IN10 IN11 IN13 IN14 IN16 SP17 SP20 SP22 SP23 SP24
0.500 0.668 0.676 0.657

0.677 0.635 0.652 0.634 0.686 0.674 0.714

0.000

OCULTURE
0.579

TR02 0.881 0.000 0.614 OP05

0.403
0.101
Figure 2. TR03
0.898 0.918
OP06
0.889
Measurement model
TRUST OP07
PERFORMANCE
4.4 Structural model Organizational
As in Table VI and Figure 3, the structural model was assessed using PLS bootstrapping culture
function. According to the results, the model has a moderate R2 value of 0.40 (Cohen, 1988),
indicating that the two exogenous variables (trust of BSR and organizational culture)
explained 40 percent variance in the endogenous variable (performance of small-scale
industries). Similarly, the results established support for H1 which signified that trust of
BSR (β ¼ 0.101, t ¼ 2.027, p o 0.043**) exerts significant influence on performance of 1647
small-scale industries. Thus, H1 is supported and trust of BSR seems to be a strong
determinant of business performance. In the same way, the results found support for H2
which signified that organizational culture (β ¼ 0.578, t ¼ 11.156, p ¼ 0.001***) exerts a
significant influence on the performance of small-scale industries. Thus, H2 (OC → OP) is
statistically significant with a t-value above 1.96. However, the results could not support
H3 (CM × OC → OP) which states that organizational culture moderates the relationship
between trust of BSR and performance of small-scale industries due to the p-value being
above 0.05 ( β ¼ 0.014, t ¼ 0.295, p ¼ 0.768), signifying that there is no statistical support
even at 10 percent level of significance.

Variables Organizational culture (OC) Performance (OP) Trust (TR)

Organizational culture (OC) 0.651

Performance (OP) 0.628 0.817
Trust (TR) 0.495 0.388 0.889 Table IV.
Note: Diagonal (italic face) represents the square root of the AVE while other entries represent the Discriminant validity
correlations matrix of research constructs

Variable Independent variable Dependent variable Moderating variable (organizational

(items) (trust) (performance) culture)

TR02 0.981
TR03 0.709
OP05 0.549
OP06 0.924
OP07 0.910
BU08 0.500
IN10 0.668
IN11 0.677
IN13 0.635
IN14 0.652
IN16 0.633
SP17 0.665
SP20 0.673
SP22 0.714
SP23 0.676 Table V.
SP24 0.656 Cross-loading

Hypotheses Path coefficient SE t-value p-value R2 Decision

TR → OP 0.101 0.049 2.027 0.043** 0.40 Supported

OC → OP 0.578 0.051 11.156 0.001*** Supported
TR × OC → OP 0.014 0.050 0.295 0.768 Not supported Table VI.
Notes: **p o0.05; ***p o0.00 Hypothesis testing
MD BU08
9.407
IN10
18.022
IN11 IN13 IN14 IN16 SP17 SP20 SP22
17.420
SP23
14.443
SP24

57,7 16.765 13.456 16.746

16.890 20.254 15.834 23.754

OCULTURE
11.57
1648
9.232 OP05
42.916 2.027
82.046
Figure 3. TR02 49.200
67.121
OP06

Structural model TR03

TRUST OP07
PERFORMANCE

Accordingly, the cross-validated communality Q2 results reported in Table VII and Figure 4
show that the value is above 0, signifying adequate predictive relevance (Fornell and
Cha, 1994). Hence, the cross-redundancy value of the model is 0.312. Also, according
to Chin (1998) on interpretation criteria and SmartPLS results, the predictive relevance of the
model is large as the Q2 value per exceeded 0.02 (small predictive relevance) and 0.15
(medium predictive relevance) and is close to 0.35 which is the largest predictive relevance.
Thus, from the outcome, the overall model has adequate predictive power (Gorondutse and
Hilman, 2015; Hair et al., 2018).

4.5 Result of moderating interaction

This section explained the implication of the interaction effect, the paper adopts a two-tailed
test due to the fact that there was scarcity of theoretical provision whether organizational
culture improves or reduces the connection between trust of BSR and performance
(Gorondtse and Hilman, 2013a, b). Hence, the effect size is calculated as follows:

R2 iR2 m
f2 ¼ ;
1R2 i

Dependent variable R2 Cross-validated redundancy

Table VII.
Predictive relevance Performance 0.40 0.312

BU08 IN10 IN11 IN13 IN14 IN16 SP17 SP20 SP22 SP23 SP24
9.410 18.180 17.189 14.533

13.733 17.004 16.527 20.330 15.327 23.890

16.563

OCULTURE
10.869

9.116 OP05
43.298 1.992
TR02 84.179
48.766 OP06
64.314

Figure 4. TR03
TRUST
0.296
PERFORMANCE
OP07

Moderating
interactions
TRUST*…
where i is the main effect model (without the moderator); m is the interaction effect model Organizational
(with the moderator); the f 2 was calculated by filling in the 2 R2 values which has already culture
been noted down:
0:4030:154
f2 ¼ ;
1–0:403
1649
f 2 ¼ 0:417:
Thus, the f 2 was interpreted by following the guidelines given in Cohen (1988), as follows:
• 0.02 Small;
• 0.15 Medium; and
• 0.35 Large;
So, based on the f 2 of 0.417, it is concluded that the effect size is large as per Cohen (1988).

5. Discussion
Statistically, the relationship between trust of BSR and performance of small-scale
industries is positive and significant. The findings also concurred with prior studies that
reported positive results between trust and business performance (Gorondutse and Hilman,
2015; Hilman and Gorondutse, 2013; Pivato et al., 2008; Zaheer et al., 1998). The results
implied that building trust with stakeholders in the form of social behavioral actions and
keeping promises may improve the performance of small-scale industries. Hence, prior
studies have recognized trust as a vital tool for business interaction employed to overcome
high-risk situations (Castaldo, 2002) and improve business performance (Gorondutse and
Hilman, 2015; Sirdeshmukh et al., 2002).
Equally, according to the findings, the relationship between organizational culture and
performance of small-scale industries is positive and significant. The research outcome is
also consistent with those of Al-bahussin and El-garaihy (2013), Ali Sha et al. (2011), Larry
et al. (2011), Galbreath (2010), Daft (2005) and Rashid et al. (2003) who established positive
linkage between organizational culture and performance. Therefore, owners/managers of
small-scale businesses should use trust of BSR behavior with stakeholders to improve the
performance of their enterprises. Likewise, policy makers need not emphasize on “how” to
deliver process to stakeholders and instead emphasize on “what” to deliver to stakeholders
(Gorondutse and Hilman, 2015).
Notwithstanding, according to the findings, the relationship between trust of BSR and
performance of small-scale industries was not moderated by organizational culture. Thus,
H3 (CM × OC → OP) is extremely not statistically significant. This implied that
organizational culture cannot enhance the trust of BSR–performance relationship among
small-scale industries in Nigeria. Therefore, small-scale industries in Nigeria have to
understand that sound organizational culture could promote business performance and
organizational success by shaping the behavior and attitude of employees and
organizational values.

5.1 Implications for practice

The study provided useful insight to owners/managers of small-scale industries on the
importance of trust of BSR in the improvement of organizational performance. Thus,
companies that invest in proactive BSR instead of just ordinary management regulations
can enjoy competitive benefits. With regard to this practice, therefore, managers can use the
trust of BSR to promote an excellent organizational image and generate more excellent
MD performance, which will, in turn, positively affect organizational outcomes. Moreover,
57,7 governments and local authorities can advance firms’ BSR practices by providing a more
comprehensive and helpful culture.
Similarly, the overall results indicated that the level of trust of the BSR of small-scale
industries would be clearly shown in their performance level. Furthermore, the overall
results showed that organizational culture contributes to the performance of small-scale
1650 industries in Nigeria by shaping the attitude and behaviors of employees and organizational
values. Therefore, the findings of the study may be useful to policy makers and academia.
The study offered a clear guide to managers to properly appreciate the fit between the
organizational culture and strategic direction of business enterprises. Accordingly, the
managers need to ensure that the organizational culture is sound and considerate enough to
improve the performance of their enterprises. Knowledge of these kind is significant to
small-scale industries because it can increase the awareness and enhance the adoption of
trust of BSR as an organizational practice which will, in turn, motivate and encourage
business performance.

5.2 Implications for theory

The study has added value by contributing to the growth of literature, particularly on the
influence of trust of BSR and organizational culture on the performance of small-scale
industries. First, it added to the body of research on the BSR by presenting an in-depth
explanation and perceived BSR as voluntary behavior. Also, it shows that, at every firm
level, BSR has provided valuable information on why firms prefer responsible rather than
irresponsible behavior. Specifically, the BSR significantly contributes to businesses in most
of the emerging economies and has a direct positive impact on firms’ strategic planning. The
findings of this study will motivate future BSR research, to explore more on SMEs from
emerging economies, and it will serve as necessary inducements for BSR strategy.
The result of this study has proved the significant influence of corporate actions on
stakeholders’ group. Likewise, the study contributes to the body of literature on the
moderating role of organizational culture on the trust of BSR–performance relationship in
the context of Nigeria. Moreover, the study contributes to existing research on the
application of stakeholder theory in a new context outside of Europe and the USA, thus
confirming the influence of the stakeholder theory concerning the importance of cooperation
and trust to business performance (Donaldson and Preston, 1995; Jones, 1995). Besides that,
the study contributed to the body of knowledge by combining different measures from prior
studies and testing the effect of trust of BSR on the small-scale industrial performance.
Nonetheless, this study does have some.

5.3 Limitations of study

This study, like any other one, has a number of limitations. First, it is a non-longitudinal
design and research findings were established on the basis of a cross-sectional survey
research. Second, the causal relationship between trust of BSR, organizational culture and
performance of small-scale industries was also established based on analysis of data
obtained using a self-administered survey method. Third, the research outcome may not be
generalized to other contexts or countries because of variations in culture, attitude and
beliefs, as the scope of the study is Kano State, Nigeria.

5.4 Conclusion
The study examined the influence of trust of BSR on the performance of small-scale
industries in Kano State, Nigeria with moderating effect organizational culture.
Consequently, the study postulated three hypotheses. According to the results, the two
exogenous variables (trust of BSR and organizational culture) accounted for 40 percent Organizational
variance of the endogenous variable (business performance). Correspondingly, the trust of culture
BSR exerts significant influence on the performance of small-scale industries. Equally,
organizational culture exerts a strong positive impact on the performance of small-scale
industries. In contrast, the moderating influence of organizational culture on the relationship
between the trust of BSR and performance is not supported. Therefore, H1 and H2 were
supported while H3 has no statistical support. These findings also concurred with those of 1651
Hilman and Gorondutse (2013), Pivato et al. (2008) and Zaheer et al. (1998).

5.5 Suggestions for future study

In overcoming the research limitations, the model can be investigated in a different setting
to revalidate the cause-and-effect relationship between the variables and establish the
moderating influence of organizational culture on the constructs. Also, future studies may
examine the model using a qualitative paradigm or longitudinal approach.

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MD Appendix. Items
57,7 The following statements describe your perception of your Organizational Culture.
Please indicate the extent to which you agree or disagree with the statement (adapt
from Wallack, 1983)
1. My organization has a procedure activity
2. My organization is hierarchical in nature
3. My organization has structured programmed
1658 4. My organization activities are in order
5. My organization has regulated activities
6. My organization is well established
7. My organization always is cautious in its activities
8. My organization is power oriented
9. My organization is a risk-taker
10. My organization is a result oriented
11. My organization is very creative in executing new programs
12. My organization is very pressurized to accomplish a task
13. My organization is stimulating in making effort to achieved goal
14. My organization is highly challenging
15. My organization is often enterprising
16. My organization is self-driving
17. I feel highly relationship oriented in my organization
18. My organization is very collaborative
19. I feel very uncourageous in my organization
20. My organization is very sociable
21. My organization give personal freedom
22. My organization is dealing equitable to all its activities
23. My organization is often safe
24. My organization is trustworthy
The following statements describe your Organization Trust of BSR. Please indicate the
extent to which you agree or disagree with the statement (adapt from Tian et al., 2011)
1. My organization socially actions sincerely aimed at contributing to society
2. My organization took a lot of effort to be socially responsible
3. My organization socially responsible practices made a substantial contribution to the
community
Please indicate the range which best describes the average performance of your
company for the past three years (your responses will be kept strictly confidential)
(adapt from Kaplan and Norton, 1992)
1. Return on Sale (ROS)
2. Return Investment (ROI)
3. Market Share
4. Sales Growth
5. Innovation and Learning Perspectives: My organization considers, improve and
learn increase new markets, revenue and margin in its bid to promote customers
6. Customer Perspective: My organization considers the customer on time, quality
performance, services and cost in order to pursue success
7. Internal Business Perspectives: My organization considered the business
processes that have the greatest impact on customer satisfaction

Corresponding author
Abdullahi Hassan Gorondutse can be contacted at: ahgdutse@gmail.com

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